RECORDER REPORT

KARACHI: In order to facilitate rice trade, the State Bank of Pakistan (SBP) has allowed Export Refinance Facility for broken rice and withdrew Letter of Credit (LC) condition for financing of brown rice.

Sources said on the request of rice exporters, the SBP has relaxed Export Refinance Scheme (ERS) requirements for rice - one of the largest exported commodity, which is generating over $ 1 billion foreign exchange annually for the country.

The State Bank, through its IH&SMEFD Circular Letter No. 02 of 2015, issued on Feb 26, 2015 has made some changes in the negative list of EFS. Previously, export refinance facility was allowed for packeted Irri, Basmati, Parboiled, White and Brown rice in retail packets of 1-50 kgs. Broken rice was not eligible for the said facility. However, now the SBP has excluded broken rice from the negative list of EFS, after which exporters can also avail export refinance facility for broken rice in retail packets of 1-50 kgs.

Moreover, as per amendment, traders/exporters can get cheap financing for the export of Brown rice without Letter of Credit. Earlier, refinance facility for the export of Brown rice in bulk or lose was only for European Countries under EFS Part-I against Letter of Credit (LC). However, now banks have been asked to provide such facility for Brown Rice without LC condition and limitation of countries.

A para: (Excluding Packeted Irri/Basmati/Parboiled/White/Brown Rice in retail packets of 1-50 kgs. Moreover, the export of brown rice in bulk/loose is eligible to European countries under EFS Part-I against LCs only) for description of point No 8 of negative list for ERS has been replaced with: "Excluding Packeted Irri/Basmati/Parboiled/ White/Broken Rice in retail packets of 1-50 Kgs. Moreover, the export of Brown Rice in bulk/loose packing is also eligible under EFS."

Meanwhile, Rafique Suleman, Chairman Rice Exporters Association of Pakistan (REAP) has appreciated the SBP's decision saying this move will help enhance the country's rice export.

"We are expecting some 20-25 percent increase in rice exports during next fiscal year as LC requirement was a major hurdle in getting EFS for brown rice," he said. Presently, Pakistan's total rice exports stood at 3.8 million tons including 0.3 million tons of broken rice and some 0.1 million tons of brown rice, he added.